WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

To allow the Employment Secretary to approve work programs that
people in receipt of unemployment benefits may be required to
participate in to continue to be eligible to receive benefits in
respect of unemployment. The maximum time such a person may be
required to participate in a program is 24 hours a fortnight for
those under 21 and 30 hours for those over 21, who receive higher
benefits.

The Prime Minister announced on a television program on 9
February 1997 that the government was planning to introduce a
series of pilot programs for young, long term unemployed people who
would work for a period equivalent, at award wage rates,to their
Newstart allowance. The Prime Minister stated that the pilot
programs are aimed at approximately 30 000 young people who have
been unemployed for six months or more. If the pilot programs are
successful, it is intended to extend the scheme.

According to the Australian Bureau of Statistics, there were 109
900 unemployed people aged between 15 and 19 who were not attending
either school or a tertiary education institution full time in
January 1997.(1)For those aged 20 to 24 and not attending an
education institution full time, the number of unemployed in
January 1997 was 137 900.(2) For both age groups, a substantial
majority of the unemployed were seeking full time work. The total
number of unemployed for 15 to 19 year olds in January 1997,
including those attending an education institution full time, was
186 000, and for 20–24 year olds the figure was 158 000. Of
the total figure, the number unemployed for over 26 weeks in
January 1997 was 32 000 for 15 to 19 year olds and 67 900 for those
aged between 20 and 24, a total for the two groups of 99 900.(3)
When announcing the proposal on television, the Prime Minister is
quoted as stating:

You're looking at particularly a hard core of about 30 000 or
more young people .... who have been out of work for six
months.(4)

The Prime Minister may have been referring to the figures for
those aged between 15 and 20, which relates to the above figure for
those who have been unemployed for 26 weeks or more and fall with
the 15 to 20 year old age bracket. If the pilot schemes were to be
extended to those aged between 15 and 24, as noted above, the
proposal could affect a significantly higher number of people.
(Under the Bill there is no age limit on those who may be required
to participate.)

The need for people to perform work to be eligible for benefits
when they are unemployed has a long history. During the Depression
in the 1930s, before the Commonwealth had power to provide social
security benefits, State and local governments often provided
schemes to provide unemployed men with sustenance benefits for
which they were required to work. The proposal was also raised by
the Hawke Labor government but was not implemented.(5) The document
Fightback!, released by the Liberal and National Partiesin 1991,
proposed that unemployed people would be eligible for benefits for
9 months and that after the end of this period there would be a
Work for Benefit program, that would require an unemployed person
to work for 2 days per week to qualify for benefits and that for
the remainder of the week they would be required to actively seek
employment.(6)

The Community Development Employment project was introduced in
1977 and enables Aborigines and Torres Strait Islander's to engage
in community projects instead of receiving unemployment benefits.
The scheme is funded by grants from the Aboriginal and Torres
Strait Islander Commission which pays the community an amount
approximately equal to the benefits the participants would
otherwise receive plus an amount for on-costs and capital
support.

Schemes similar to that proposed in the Bill have also been
implemented internationally. An example is in the U.S. and it's
Workfare program, which was introduced in 1981. In a comment on the
scheme, a member of the Centre for Law and Social Policy in
Washington is reported as stating:

The basic finding on Workfare programs that have been evaluated
is that they appear to have resulted in little or no improvement in
increasing the employment or earning prospects of the
participants.(7)

The arguments in favour of the proposed scheme are based on the
effect that a need to perform a 'normal job' will have on the
attitude of the long term unemployed and the apparent need for
those on the Newstart allowance to contribute more to the taxpayers
who fund such benefits. The Prime Ministerstated that:

We're simply saying that in 1997 it is reasonable for the
community to say of people that are guaranteed a safety net that
they should at award rates be prepared to do something in return
for that guaranteed safety net.(8)

The Prime Minister, in response to a question without notice,
reinforced this position, stating:

What I proposed yesterday [the day the proposal was announced on
television] recognises a very simple principle: that in a civilised
democratic society, provided the rates of pay are fair and just..
which ours will be.. it is not unreasonable to ask people to do
something in return for a social welfare benefit if they are able
to do so.(9)

The government has also expressed the view that the scheme would
raise theposition of the young unemployed. In the second reading
speech to the Bill, the Minister stated:

The value of the work for the dole initiative lies in bringing
young unemployed people back into a work culture to help rebuild a
work ethic. It will give young people a chance to engage with the
community rather than being alienated from it.

The second reading speech later acknowledged that the proposed
scheme was not a solution to youth unemployment but should be
considered in the context of other programs and policies.(10)

It is envisaged in the second reading speech that there will be
approximately 50 pilot projects in regional areas with high rates
of youth unemployment, with another 20 pilot projects available for
other 'quality' projects. There will be a compulsory element to the
projects and recipients of benefits relating to unemployment may be
required to work at award rates for a period equal to the value of
their benefits. This is estimated in the second reading speech to
be approximately 2 to 2.5 six hour days per week. The different
length of the possible requirement is based on the level of
benefits received. People in such schemes will continue to be
required to satisfy the employment activity test which requires
them to actively seek employment. The effect of the pilot programs
will be evaluated to determine if the scheme should be
extended.

The work people will be performing will relate to community
projects. The Chief Executive of the Victorian Chamber of Commerce
and Industry is reported as stating: 'If the work competes with
products and services provided by the private sector it certainly
wouldn't have our support'.(11)

There has been considerable opposition to the proposed scheme. A
major criticism of the proposal is that it does not necessarily
provide training to an unemployed person and will therefore not
give participants a greater chance of obtaining long term
employment. This raises the issue of whether the long term
unemployed would be better assisted by training programs that also
involve a working period or by part time employment that does not
necessarily involve training, either on or off the job. The
government's reduction of training and employment programs
initiated under the former government's One Nation program
contained in the 1996–97 Budget illustrates that the
government is not of the opinion that such schemes are the best way
to assist the long term unemployed.

Much of the criticism of the scheme has centred on the potential
compulsory nature of the work. The President of the Australian
Council of Social Service is reported as saying that compulsory
schemes fail because they were costly to administer and were
generally not linked to recognised training. The executive officer
of the Australian Youth Policy and Action Coalition is reported as
criticising the scheme as it will take young people away from the
mainstream labour market and would not tell an employer about a
person's enthusiasm to work.(12)

The compulsory element of the scheme has also been criticised by
representatives of religious and social welfare groups. It has been
reported that representatives of Anglicare Australia; the
Australian Catholic Social Welfare Commission; the Uniting Church
and the Salvation Army wrote to the Minister, Dr Kemp, stating:

The compulsion threatens to undermind voluntary work; it risks
deploying youth as cheap labour and it has the debilitating image
of 'earning hand-outs'

We the community also have an obligation to provide training for
them, jobs as soon as possible and a level of minimum
payment...(13).

The argument has also been made that not only will the proposed
scheme provide no or little training, but that it may lead to the
substitution of currently employed workers for those performing
work under the proposed scheme. While the amount of time a person
may be required to work for will be related to their benefit and an
award rate of pay (according to the second reading speech this will
be the national training wage award level C rate), there will be no
requirement for the organiser of a program to actually pay the
person on the scheme. While it is envisaged that the scheme will
only apply to community service projects, it should be recognised
that not all community service projects run on a fully voluntary
basis and that employment in the sector may be effected by the
proposed scheme. Regarding the possibility of the scheme being
extended to the private sector, the chief executive of the
Victorian Chamber of Commerce and Industry is reported as stating
that the scheme would encourage job sheddingand that firms would be
tempted to seek an unfair advantage over others by sacking some of
their paid staff and replacing them with unemployed youth.(14)

The Premier of Victoria has suggested a different scheme which
would involve 4 days work and 1 day training per week. It is
reported that the Premier will establish a pilot program for
approximately 100 participants who would be paid at award rates and
that training would be paid for by the Federal government. It is
reported that while Mr Kennett supports the general proposition of
people working for benefits when they are unemployed, he considers
that more training and more working time in training positions
would be a more appropriate scheme.(15) It is also reported that Mr
Kennett's proposed scheme would provide an initial 9 week training
period and that he stated:

The first nine weeks they will go to a training course where
they will be trained to a level that means when they arrive at the
door of the employer, they have actually got some basic
skills.(16)

On the question of the value of manual labour on community
projects, Mr Kennett is reported as stating that:

I don't think that is going to give them experience that will
lead to qualifications for long term employment.(17)

A further matter is the cost of the scheme both to those
involved and those providing the community employment. The cost to
the individual involved in a compulsory scheme will principally
centre on their transport costs, assuming that the relevant
community group organising the scheme will provide such items as
appropriate clothing and tools.

In relation to transport costs, unemployed people without their
own transport may face considerable difficulties and costs in
regional areas, to which the pilot programs will be aimed. In
regional areas public transport is not as generally available, or
as regular, as in metropolitan areas. It is not clear in the
various announcements regarding the scheme how the issue of
transportation in regional areas will be resolved. It was stated in
the second reading speech for the Bill that participants would
receive an additional $20 per fortnight. As noted above and in the
explanatory memorandum to the Bill, participants will work for 2
days per week for those 18 to 20 years old and 2.5 days per week
for those aged 21 or older. Assuming a person is working for 2.5
days per week, this will amount to 12 trips to and from the program
per fortnight, and the $20 supplement will amount to $1.67 per
trip, a fare that is unlikely to be available in metropolitan or
regional areas. It is also unlikely that such an amount would cover
costs even when a person has their own transport.

It has been reported that the government estimates that the cost
per participant will be between $2 000 and $3 000 on top of their
benefit payments.(18) The explanatory memorandum to the Bill
estimates the cost of the proposal to be $13 million in
1997–98.

A further issue relating to the scheme is that it appears
participants will not be covered by workers compensation insurance
as there will be no employment relationship with the organisation
providing the program. Commonwealth workers' compensation is
specifically excluded by the Bill. If a person is injured while
participating in a program, their ability to recover compensation
is likely to be restricted to common law damages based on
negligence, which requires a stricter standard and allows a wider
range of defences than workers' compensation schemes.

The object of the Bill is contained in clause 4
of the Bill. Principal parts of the object relate to 'the principal
of mutual obligation' for those in receipt of payments relating to
unemployment to participate in approved programs to receive such
payments and that recipients of such payments may be required to
participate in such programs.

Schedule 1 of the Bill will amend the Social Security Act
1991 (the Principal Act). Item 4 deals with
approved programs for unemployment payment. The Employment
Secretary will be able to declare a program to be an approved
program. A program is not to be declared to be an approved program
if it would require a person under 21 to work for more than 24
hours each fortnight, or more than 30 hours for those over 21. (The
Bill does not contain a requirement that guidelines for such a
declaration be made or, if made, be disallowable by
Parliament.)

Section 601 of the Principal Act contains details of the
activity test that must be satisfied for unemployment benefits to
be payable. Item 5 will allow the Secretary to
require a person to participate in an approved program of work to
satisfy the activity test. However, they will not be exempt from
the requirement to actively seek work. Item 6
provides that the Secretary is not to notify a person that they are
required to participate in a program if:

they are receiving reduced benefits due to the application of
the income test;

in the Secretary's opinion it has been established by medical
evidence that the person has an illness, disability or injury that
would be aggravated by participation in a program; or

in the Secretary's opinion the conditions of the work would
constitute a risk to health or safety or would breach a law
relating to occupational health and safety.

If a person has been notified that they are required to
participate in a program and any of the above three points arises
after notification, the Secretary may (not must) notify the person
that their participation in the program is no longer required.

If a person fails to participate in a program after notification
of their requirement to do so and does not have a reasonable excuse
not to commence or complete the program, or comply with the
conditions of the program, they will be taken to have failed the
activity test (Item 7). Section 624 of the
Principal Act provides that a failure to comply with the activity
test will result in benefits not being payable for the 'activity
test deferment period'. This will be a period of between 2 and 6
weeks, with the period increasing as the person's period of
unemployment increases, for an initial breach plus additional
periods if there have been other, prior, breaches within certain
periods (section 630A of the Principal Act).

Currently, a Newstart Activity Agreement cannot compel a person
to work. This will be repealed by Item 8.

Item 10 will insert a new Subdivision G into
Division 1 of Part 2.12 of the Principal Act. It deals with when a
person is subject to an activity test penalty period, which is
imposed for such actions as failure of the activity test, refusing
to enter into an activity agreement or voluntary unemployment, or
an administrative penalty period, which is imposed for actions such
a failure to attend a Departmental interview when requested to do
so. Proposed section 631B provides that a penalty period will cease
to apply when a person enters an approved work program, whether the
person completes the program or not (However, failure to complete
the program without reasonable excuse will result in a failure of
the activity test so that benefits will not be payable.)

Proposed section 631C provides that work in an approved program
will not be taken to be in employment for the purposes of:

Commonwealth workers' compensation legislation;

the Superannuation Guarantee scheme; and

the Workplace Relations Act 1996.

The $20 per fortnight supplement for participants is contained
in proposed section 644AAA and will be payable for each fortnight
during which the person participates. If a person ceases to
participate in circumstances that would amount to a breach of the
activity test or a failure to comply with an activity agreement,
the supplement will not be payable in respect of that
fortnight.

A number of sections of the Principal Act provide for the
internal review of certain decisions and for appeal to the Social
Security Appeals Tribunal for subsequent review of certain
decisions. Items 15 to 17 will exclude decisions
to approve programs under this Bill from such review.

As originally announced, the scheme was to apply to young,
long-term unemployed. As the Bill stands, there is no age limit on
who may be required to participate in a program, nor is there a
requirement that a participant has been on benefits for longer than
a certain period. In an interview on A.M. on 19 March 1997, the
Minister is reported as having stated:

At the end of these pilots, we'll look at extending the scheme
and the legislation will be in such a form that we won't be then
required to go back to the Parliament to do that.

As noted in the Background, a major reason behind the proposed
scheme is that it is not unreasonable for people receiving benefits
to do something in return for those benefits if they are able to do
so. Logically, it can be argued that this reasoning should apply to
all those in receipt of government benefits and not just the
unemployed. For example, the U.S. Workfare program extends to
single mothers in receipt of benefits in an attempt to reintroduce
them into the workforce. Childcare is provided. Similarly, the
logic could be extended to married non-working mothers with school
age children who would be able to perform work in return for
benefits such as family allowance.

A further matter of interest is the title to the Bill. There is
no social security payment titled as 'the dole', with benefits to
the unemployed mostly being provided under the Newstart scheme.
While the term 'dole' is defined in dictionaries to include
payments relating to unemployment, the term is also often used in a
negative sense, such as the term 'dole bludger'. It may be
interesting to see whether the use of such terms that are not
defined in legislation will become a more common practice in
legislative drafting.

Chris Field
7 May 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.

IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.

ISSN 1328-8091
Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library,
1997.

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Last updated: 8 May 1997